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787 AND 747-8 IMPACT BOEING’S RESULTS

October 22, 2009 by

21 Oct 09. Boeing’s Third-quarter revenue was $16.7bn, 9 percent higher than last year’s strike-affected quarter. Loss of $2.23 per share reflects $3.59 per share of expenses related to previously announced 787 cost reclassification and 747 charge, partially offset by solid performance in other commercial programs and the defense business. Operating cash flow increased to $1.2bn. Backlog at $320bn – nearly five times current annual revenues.2009 guidance updated for 787 cost reclassification and 747 charge

Table 1. Summary Financial Results
Third Quarter Nine Months
————- ———–
(Dollars in
Ms, except
per share data) 2009 2008 Change 2009 2008 Change
—————– —- —- —- —-

Revenues $16,688 $15,293 9% $50,344 $48,245 4%
Earnings/(Loss) From
Operations ($2,151) $1,147 NA $403 $4,193 NA
Operating Margin (12.9%) 7.5% NA 0.8% 8.7% NA
Net Income/(Loss) ($1,564) $695 NA $44 $2,758 NA
Earnings/(Loss)
per Share ($2.23) $0.96 NA $0.06 $3.76 NA
Operating Cash Flow $1,197 ($442) NA $2,391 $1,240 93%

The Boeing Company (NYSE: BA) reported a third-quarter net loss of $1.6bn, or $2.23 per share, as revenues rose 9 percent to $16.7 bn. Current period results reflect the previously announced reclassification to research and development (R&D) of costs incurred through July for the first three 787 flight-test airplanes ($2.46 per share), spending on those planes for August and September ($0.14 per share), and the 747 charge ($0.99 per share), partially offset by solid performance in other commercial airplane programs and the company’s defense business (Table 1). Last year’s strike and supplier production problems reduced year-ago revenue by an estimated $2.1bn and earnings by an estimated $0.60 per share.

Revenues for the first nine months of 2009 rose 4 percent to $50.3bn due to higher commercial deliveries and growth in the defense segment. Earnings for the first nine months declined to $0.06 per share, including the third-quarter impacts described above and a first-quarter $0.38 per share impact from reductions to future twin-aisle production rates and lower delivery price escalation forecasts in Commercial Airplanes.
Earnings guidance for 2009 has been adjusted to between $1.35 and $1.55 per share, from $4.70 to $5.00, to reflect the 787 and 747 impacts.

“The 787 cost reclassification and the 747 charge for increased costs and
difficult market conditions clearly overshadowed what continues to be otherwise solid performance across our commercial production programs and defense business,” said Boeing Chairman, President and Chief Executive Officer Jim McNerney. “We look forward to getting the 787 and 747-8 in the air soon and moving forward with flight test and certification for these two important programs.”

Boeing’s quarterly operating cash flow was $1.2bn, which includes higher
cash receipts than the year-ago period partially offset by continued investment in development programs (Table 2). For the first nine months of 2009, operating cash flow was $2.4 bn. Free cash flow* was $1.0 bn in the quarter and $1.4 bn year-to-date.
Table 2. Cash Flow
Third Quarter Nine Months
————- ———–
(Ms) 2009 2008 2009 2008
———- —- —- —- —-

Operating Cash Flow(1) $1,197 ($442) $2,391 $1,240
Less Additions to Property,
Plant & Equipment ($229) ($422) ($965) ($1,229)
—– —– —– ——-
Free Cash Flow*

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